Today has been an interesting day. In conversations with business colleagues today, the general refrain was business stinks. An architect I do engineering work for said that he's giving it 3 more months. If there's not enough work by then, he's calling it quits and looking for other work. The accountant for a large HVAC contractor that has worked for me in the past told me that their scheduled work has fallen off a cliff in the last 3 months. It will be down 75% year over year by October. These guys do large multi-family and apartment complexes all over the southeast. Last year business was booming as developers were building apartment buildings in expectation of big demand from all of the people losing their homes. I guess there wasn't as much demand as they thought. Everyone is moving in with Mom and Dad. And lastly, a close friend that runs another HVAC firm breathed a sigh of relief as he was able to land a contract that will get them through another two months.
If I were to base my trading and investing decisions off of these conversations, I would be heavily shorting the market. But that would not be the best idea. The fact is that there are other forces impacting the market and we cannot rely on coincident economic reports or anecdotes to make our decisions. The best information we have is the price of a market, and today the price of the stock market indexes continue to grind steadily higher. Until that changes there is no reason to fight it.
I must admit that I have tried to short a few stocks since May with limited success. When the market gives an opportunity, I don't mind testing the waters with a couple of short positions, but they just haven't worked. At some point they will and I'll know that it is time to increase short exposure. Until then I keep watching my long positions go up, and hope the economy will too.
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My uncle was an Ivy League-educated architect with a large prominent firm. My aunt frequently said that they always knew when a recession was worsening which surprised me when i was young because one would think that architecture was a rather toney profession.
"The fact is that there are other forces impacting the market and we cannot rely on coincident economic reports or anecdotes to make our decisions."
Amen. That's one of the things that i like about your writing. You don't waste a lot of needless blather about current economic conditions.
To those bears who have been shorting since March i say "What do think last Sept, Oct, Nov was about when the mkt was careening out of control ?"
"The best information we have is the price of a market..."
When i was a broker, i use to say to my clients price is like tires on a car. You give me a jalopy with great tires & i'll give you a Ferrari with bald tires with the radial belts peeking out & we''l race. Price is where the rubber meets the road.
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